State Senator Andy Manar and thirteen fellow Democrats have sponsored a bill to streamline Illinois’ current education funding mechanism. The School Funding Reform Act of 2014 is intended to improve a funding mechanism that has been in place since 1999. A bipartisan committee formed earlier this year issued a report acknowledging the need to change the existing system, and Manar cited Illinois’ inequitable funding as evidence that the current mechanism needs to change.

Most state education funding in Illinois is done through the General State Aid Formula (GSA). GSA establishes a Foundation Level of spending per pupil ($6,119 in 2014) and adds to local funding for districts that do not meet the Foundation Level. If local funding exceeds this level the state provides a flat grant per pupil ($218 in 2014).

In addition to the GSA the state funds education through categorical grants for a variety of expenses, supplemental grants for services, and a special block grant to Chicago for special education services in city schools. This combination of funding methods results in most state money being distributed without regard to student needs or local ability to pay.

The reform act consolidates most of these state funding streams, with some categorical grants remaining separate. It also replaces the existing Foundation Level with a Weighted Foundation Level that includes adjustments for specific student characteristics, effectively augmenting the current foundation with additional money for at-risk, gifted, and special education students, as well as English Language Learners.

Under the reformed funding mechanism a base funding amount would be determined for each district, then additional funding would be added dependent on relative prevalence of the above characteristics. Finally, the state would calculate how much to disburse to each district based on the districts’ capability to contribute, measured by tax base.

The School Funding Reform Act of 2014 is in line with the national trend of simplifying funding mechanisms, weighting for student needs, and enhancing transparency. From Boston to San Francisco, and even in Chicago, funding reform has pursued these objectives. Manar’s proposal, however, is not a student based budgeting mechanism, as has been implemented elsewhere. Rather than attaching a dollar figure to individual students who then carry state funding to their school, the proposed mechanism relies on demographic percentages at the district level. While this move may lead to incremental improvements in transparency and stability, there is evidence that student based budgeting would be better.

It is possible to have significant inequality in per-pupil spending, even between schools with similar student populations, and between schools in the same district. A school with higher personnel costs may spend significantly more per-pupil than does a school with lower personnel costs. The use of average salary costs in school budgeting makes this particularly problematic, as it disguises actual compensation paid and allows schools to hide inequality in per-pupil spending. Manar’s reform would deliver additional resources to high-need districts, but it would not address intradistrict inequality, and may actually benefit the schools that are least in need of help.

The state would do better to adopt a student based budgeting mechanism. Such a system would allow the state to prioritize the same student needs, and would assure that schools see the funding that is meant for specific students. Chicago’s move to student based budgeting shows that such a reform can be implemented. The state has already established a base level of per-pupil funding, while the School Funding Reform Act of 2014 lists specific characteristics that ought to be weighted. There is no need to start from scratch or introduce measures that are objectionable to stakeholders. The existing Foundation Level can be combined with the desired weighting characteristics, tweaked to be weighted on an individual basis, to determine per-pupil funding for the entire state.

Rather than pass an act that does not improve transparency at the school level, Illinois’ Senate should take the opportunity to enhance transparency at all levels. Rather than streamline state education grants while allowing inequality to persist for individual students, the state should simplify its funding mechanism and guarantee equality for all Illinois’ students. Schools across the nation are benefiting from student based budging – it would be a shame of Illinois missed the chance to do the same.

The retirement benefits ultimately received by members of both plans within FRS will come at an ever-increasing cost to taxpayers and other public services if needed technical adjustments to both plans go neglected.